MERITAGE HOMES
Secure your homesite NOW! Prices increase in January!
I got this email from Meritage Homes last week. Prices going up! I haven’t seen this type of activity for a while…long while! This is good news. Now that they have repriced new homes for today’s market value, they are attracting buyers. They must be attracting enough buyers to feel comfortable to raise prices. This is just the next step in the recovery of the real estate market.
I believe home building will rebound further this year. People are still migrating here to escape the cold. Yes, we need more jobs, but one aspect of job creation is home building. We had a glut of vacant homes on the market. A great deal of them have been absorbed over the past few years.
Let me back up a bit. First, when most people are foreclosed on with their principal residence, they then rent a home. Of course there are a few that go to an apartment, move in with a roommate or move back to mom and dad’s house. But mostly, they rent a house when they previously needed a house. So why then did we have so many vacant homes across the valley? This is simple: faux investors bought about 50,000 and left them; builders were constructing whole subdivisions prior to selling; there was an exodus of about 150,000 illegal aliens; And as mentioned above, financially distressed people combined housing.
How do you fix this problem: a glut of vacant homes? There is only one way. You must grow your Demand or in this case population to absorb this excess inventory. When the homes and population are in sync with supply and demand, we need about 35,000+ new homes per year to house the increases in population. The increase in population come from Net migration, Second home buyers and Population growth here.
In 2009, approximately 8,650 single family homes were built and in 2010 that number is about 13,000. Therefore, in the past 2 years alone we have adsorbed about 48,000 of those vacant homes. For the 2007 – 2008 period the number should be slightly less, but all in all about 90,000 of those homes are no longer available.
One issue we are seeing for our Short Salers right now is finding a rental after they sell. This issue is mostly in Scottsdale. Investors are not buying more expensive Scottsdale properties to rent out. It makes more sense to buy 3 homes for $100,00 each that rent for $1,000 per month each, than to buy one home for $300,000 that rents for $1,800. This is causing a shortage of rentals and rents are rising.
Anyway, back on point! There is a very good chance new home sales can rise to a level of around 20,000 in 2011. That would be back to back 50% increases, year over year, and that would create JOBS!
If this post is confusing or disorganized, please forgive me. I just saw this email from Meritage Homes and started rambling. Time to Ramble On!
Just my opinion…JeffRCameron
480-652-2004